Governor LePage and his allies claim that Governor LePage’s budget proposal can’t raise property taxes because that’s a municipal decision. They’re wrong. If passed as written, Governor LePage’s budget proposal would directly raise property taxes for hundreds of thousands of Maine families by eliminating the Maine Residents Property Tax and Rent Refund Program and the Homestead Exemption for Mainers under 65 years of age.
Property taxes for any Mainer under the age of 65 who currently takes advantage of the Homestead Exemption will rise by an average of $120 per year, according to basic arithmetic using the details of the Governor’s budget proposal and Maine Revenue Services data on homestead exemptions and property tax rates by town. The amount will be greater for homeowners who live in towns with high mil rates and less for homeowners who live in towns with low mil rates. Property tax bills will rise for approximately 200,000 of the estimated 300,000 Mainers who currently take advantage of the Homestead Exemption.
Maine Residents Property Tax and Rent Refund Program (also known as the “Circuit Breaker”)
Governor LePage’s budget proposal would raise property tax bills for low- and middle-income Maine families, including senior citizens, by eliminating over $73 million in property tax relief through the Circuit Breaker program. The average property tax hike for the tens of thousands of families who will lose property tax and rent refunds under the circuit breaker program is $479 per year according to Maine Revenue Services data. Currently, about 89,000 Mainers receive property tax and rent relief through the Circuit Breaker program. The vast majority of them will pay more in property taxes as result of this proposal. Since the Governor’s budget will significantly tighten eligibility criteria for senior citizens, many seniors would also lose property tax relief under this proposal.
Indirect Property Tax Increases
In addition to the indisputable tax hikes caused by the elimination of property tax relief, a variety of funding cuts to local municipalities and schools will indirectly raise property taxes, regardless of the rhetoric from Governor LePage and his allies. Budget items that will lead to some combination of property tax increases and cuts to municipal public services include but are not limited to:
- The elimination of about $280 million (or $198 million against a current policy baseline) in routine aid to municipalities over two years
- A cut in inflation-adjusted state funding for local schools and shifting of $14 million in teacher retirement to local property taxpayers
- A state raid of local excise tax revenue worth $4 million per year
Even if municipalities take a balanced approach to covering these funding cuts—half tax increases and half spending cuts—all property tax and rent payers will pay more. And that’s on top of the direct property tax increases caused by the elimination of property tax relief through the Homestead Exemption and the Circuit Breaker.
Anybody who says that Governor LePage’s budget doesn’t raise property taxes is wrong. Don’t believe them.
Luckily, many others understand budget arithmetic and don’t deny the reality that the Governor’s budget proposal does, in fact increase property taxes:
“Gov. Paul LePage proposed a 2014-15 state budget that, in MMA’s analysis, would shift $420 million in costs of running state government to Maine cities, towns and local taxpayers.”
“Revoking state-municipal revenue sharing, flat-funding education at curtailment levels, reducing payments toward teachers’ pensions and capping the state’s contribution toward general assistance, for instance, would likely cause towns and cities to both bludgeon their local budgets and increase their already-too-high property taxes.”
“While the governor may tell himself he is not proposing to raise taxes, when you start cutting tax discounts for property taxpayers you are increasing what they pay.”